Benefit Sharing Plan
Transcript of Benefit Sharing Plan
BENEFIT SHARING PLAN DRAFT 0.2
By: Joseph Adiguna Hutabarat, MSES
Date: July 5th, 2019
Benefit Sharing Plan_draft0.2
2
Document Control
Draft 0 : Preliminary scratch draft, circulated informally within KLHK, DDPI, and World Bank, dated May 19th, 2019
Draft 0.1 : Incorporated written input from DDPI and the World Bank Incorporated discussion results with KLHK (May 27th, 2019) Incorporated discussion results with World Bank (May 29th, 2019) Incorporated discussion results with DDPI (June 13th, 2019)
Draft 0.2 : Incorporated inputs from the Aide Memoire Joint Mission in Jakarta, June 24-28, 2019.
Benefit Sharing Plan_draft0.2
3
1 INTRODUCTION
1.1 Background of ER Program The East Kalimantan Jurisdictional Emission Reductions Program (ER Program) is a national project to
reduce deforestation and forest degradation in an area that covers the entire 12.7 million hectares of
East Kalimantan Province. Around half of that area is covered by tropical rainforests which are home to
a wealth of globally significant biodiversity, and that support indigenous and other local communities. In
the ten-year period from 2006 to 2016 around 15% of that forest was lost mainly due to the expansion
of oil palm areas, timber plantations and mining. It is expected that those drivers will be addressed in
this ER Program by improving land governance, improving livelihood of local communities, developing &
implementing policy that supports habitat and species protection, and enabling active participation by
stakeholders in reducing deforestation and forest degradation in their areas. The ER program will
support a combination of enabling conditions and promotion of sustainable management practices to
address the underlying drivers of emissions. As much as 86.3 million tCO2e of (gross) emission will be
reduced over a five-year period (2020-2024) in this ER program.
The ER Program will be implemented by all beneficiaries with the Ministry of Environment and Forestry
(MoEF) and the East Kalimantan Provincial Government as the responsible bodies for managing the
proposed ER Program. Relevant agencies in the central, provincial, and districts governments will be
involved in the project implementation following the directions of the MoEF and East Kalimantan
Provincial Government. Private sectors and local communities within the East Kalimantan Province
jurisdiction are also the beneficiaries to the project and will implement the ER Program according to the
specific roles and responsibilities agreed in the ERPD (Emission Reductions Program Document). The
non-government institutions will be involved and become the government’s partners in implementing
the ER Program. The benefits from the emissions reduction (ER) Program will come from the ER
payments. The ER Payments are the entire volume of ER paid to Indonesia in a given reporting period.
The first reporting period will be in 2022 followed by the first payment in 2023, and the second
reporting period will be in 2024 followed by the payment in 2025. The mechanism in distributing the
benefit was designed in this Benefit Sharing Plan (BSP) document.
The ER Program’s benefit sharing plan was designed to reach a diverse group of beneficiaries, which
includes four levels of government (National, Provincial, District, and Village), wide range of private
sectors (palm oil, forestry, mining), and local communities that often located in remote villages and may
not have official titles to their land. The eligibility criteria for beneficiaries have been designed to ensure
that all relevant contributors to emission reductions can receive benefit from the program, with the
village governments playing a central role in channeling benefits to local community. To further ensure
that the benefits flow to these beneficiaries in a way that avoids bureaucratic delays, while fulfilling
principles of good financial governance, ERPA funding at the central level will be managed by the
Environmental Fund Management Agency (BLU-BPDLH) while key decisions for disbursement at the
subnational level will be made by the provincial government. Furthermore, benefits will not be allocated
merely on the amount of reduced emissions but also on the past-sustainable practices by local
communities (especially adat communities) who have managed their forests sustainably for centuries.
Hence, this BSP document was designed in a transparent and participative manners to intensify
stakeholder’s involvement and facilitate beneficiaries’ interest and needs.
Benefit Sharing Plan_draft0.2
4
1.2 General Principles of BSP Benefit sharing plan (BSP) is a plan developed by the ER Program Entity in accordance with the ER
Program Document (latest ERPD version, May 2019) and the FCPF Carbon Fund Methodological
Framework (2016)
and submitted to the Trustee on how the ER Program Entity will share the Monetary and Non-Monetary
Benefits with the Beneficiaries (FCPF Carbon Fund Methodological Framework, 2016). It is expected that
BSP will encourage improved forest management and help address the drivers of deforestation and
forest degradation (Denier et al. 2014).
The general principles of BSP are transparent, effective, respect customary rights to lands and territories
and reflect broad community support, and have clear legal status on rights to carbon and relevant lands.
The BSP is aligned with and support the ER Program. It is designed that the BSP development was based
on the transparency and participation work of relevant stakeholders.
1.3 Legal Framework for BSP Key regulations related to the benefit sharing plan are as follows:
Republic of Indonesia Constitution 1945, Article 33 Point 3 which constitute that all natural resource should be managed by the country and will be used for the wellbeing of Indonesian
Law No 41 year 1999 on Forestry Law. This law forms the basis for forestry schemes in Indonesia, including the distribution of state forest and non-state forest.
Law No 17 year 2003 on State Finance. This law forms the countries financial procedures, regulations, terms, including the correlation between central, sub-national, and foreign institutions.
Law No 32 year 2009 on the Protection and Management of the Environment which includes the mandates to establish the economic instrument.
Law No 12 year 2011 on the Establishment of Laws and Regulations including the procedures to establish the Governor and District regulations.
Law No 23 year 2014 on Local Government which shifts the authority for issuing mining and logging permits from districts to provincial government.
Law No 6 year 2014 on Village Government including the village governance, village development, and community development.
Government Regulation No 2 year 2012 on Regional Grant which regulates grants for and to regional governments including Governor, District Head, and local government organisastions.
Government Regulation No 74 year 2012 on Public Finance Service (BLU), which regulate the establishment of BLU
Government Regulation No 45 year 2013 on Implementation Procedure for Regional Revenue and Expenditure Budget
Government Regulation No 46 year 2017 on Environmental Economic Instrument
Presidential Regulation No 16 year 2018 on Procurement of Goods and Services
Presidential Regulation No 77 year 2018 on Management of Environmental Funds
Minister of Forestry Regulation No P.36 year 2009 on the Procedures for Carbon Sequestration and Storage on Production Forest and Protection Forest
Minister of the National Development Planning/Head of Bappenas No 4 year 2011 on the Procedures for Planning, Proposal Submission, Assessment, Monitoring and Evaluation of activities financed by Foreign Loans and Grants
Benefit Sharing Plan_draft0.2
5
Minister of Finance Regulation No 191 year 2011 on the Procedure for Grant Management which provides more detail procedure on managing foreign grants
Minister of Home Affairs Regulation No 39 year 2012 on the Guidelines for Grants and Social Aid from Regional Revenue and Expenditure Budget
Minister of Home Affairs Regulation No 52 year 2014 on the Recognition and Protection of Adat Community. This regulation will recognize adat community and protect their land tenure rights which will enable them to participate in the program and received the ER Program benefit legally.
Minister of Home Affairs Regulation No 113 year 2014 on the Village Income
Minister of Environment and Forestry Regulation No P.32 year 2015 on the State Forests which defines the procedure for registering land as a titled forest (hutan adat).
Minister of Agraria and Spatial Planning Regulation No 10 year 2016 on Registration of Land Rights which regulates the registration of communal adat land rights on adat law community land within the state forest area
Minister of Finance Regulation No 224 year 2017 on the Grants from the National Government to the Regional Governments
Minister of Environment and Forestry No P.70 year 2017 on the Procedure for REDD+ Financing
Governor of East Kalimantan Provincial Regulation No 1 year 2015 on the recognition and protection of indigenous peoples
Governor of East Kalimantan Provincial Regulation No 1 year 2016 on the spatial planning in East Kalimantan for the period of 2016 to 2036, and the resolution of communal rights and land claims within the state forest area
Forthcoming East Kalimantan Governor Regulation on Climate Change Mitigation and Adaptation
2 BENEFICIARIES
2.1 Categories and Rationale of Beneficiaries Beneficiaries are the recipients of Monetary and Non-monetary Benefits which may include sub-entities
and other relevant stakeholder (FCPF Carbon Fund Methodological Framework, 2013). The categories of
beneficiaries are considering the key roles and responsibilities in (i) policy development, implementation
and administration by government institutions; (ii) the implementation of activities under the ER
Program on the ground; and (iii) the rights to benefits due to rights to land where emission reductions
take place. Thus, the following beneficiaries are identified:
Government institutions involved in policy development, and program management at the central government level, and at the subnational levels. It is also includes the conservation agencies who manage the conservation areas in the sub-national level which are the MoEF Technical Implementation Unit in the sub-national level; the FMUs whom administered forest land under the subnational government; and village governments that are more directly involved in implementing ER activities.
Private Sector. Companies that implement ER activities are estate crop companies, and owners of mining concessions, and of the various types of forestry concessions (IUPHHK-HA, IUPHHK-HT, IUPHHK-RE, IUPHHBK, IUPJL).
Benefit Sharing Plan_draft0.2
6
Local communities including Adat1 Communities who lives inside or close to the areas where ER activities happened, or who implement activities that lead to ERs such as alternative livelihoods, fire protection, or forest monitoring. Local communities might be in the form of community groups (such as adat communities and farmers groups) or individual. The benefit for community groups might go directly to the groups institution whenever the eligibility criteria applies, whilst the individual will receive the benefit through the village government according to the program activities.
Furthermore, the key roles and responsibility of each beneficiary in ER program are described in the
following Table 2.1.
Table 2.1. The list and rationale of beneficiaries.
Beneficiaries Key ER Roles
GOVERNMENT INSTITUTIONS
National Level
National Government - Issuance, implementation, and enforcement of relevant national policies
- Administration of the national REDD+ system - Administration of the BLU-BPDLH (see more information below) - ER Program administration, including national registry, national
forest monitoring system, social & environmental safeguards information system, Monitoring, Reporting, and Verification (MRV), coordination of ER interventions at National level (with relevant Ministries).
- Implementation of ER interventions related to capacity building for licensing management (forest certification, plantation certification, forest and ecosystem restoration, fire prevention and control, facilitation of social forestry)
Conservation Agencies (National Parks, Nature Reserves)2
- Responsibility for conservation areas in East Kalimantan - Development of conservation partnerships with local communities - Forest and Wildlife Protection and Monitoring - Fire Management and Prevention - Partnerships with local communities on Sustainable Livelihood in
buffer zone areas.
Sub-national Level
East Kalimantan Government - Prepare, implement, and enforce regional regulations (and enforcement of national regulations, where appropriate), improve land management plans, increase forestry administration capacity, reduce deforestation related to overlogging and timber plantation, reduce deforestation related to mining, and support activities for emission reduction
- Facilitating coordination of ER interventions initiated by relevant
1 See Section 4.4 for further information on Adat Communities. 2 MoEF technical units and FMUs are under the national and Provincial Government respectively but given their
roles in the ER program they are considered beneficiaries in their own right.
Benefit Sharing Plan_draft0.2
7
Beneficiaries Key ER Roles
provincial government services (Forestry Service, Plantation Service, Mining Agency, Environmental Service, Marine & Fisheries Agency, etc.)
- Responsibility to conduct MMR (Measurement, Monitoring, and Reporting), FGRM, sub-national registry system, and social & environmental safeguards at provincial level including the web-based platform
- Implementation of ER interventions related to capacity building through FMUs and estate crops agency for fire prevention and control, facilitation of social forestry, and climate/green villages
- Facilitating the process of proposing or permitting social forestry in the Working Group on the Acceleration of Social Forestry (Pokja PPS).
- Facilitating FMUs in improving management capacity, technical capacity in implementing sustainable forest management (including RIL), community empowerment, and business plan development.
FMUs1 - Conflict resolution - Support for social forestry - Forest management, protection, and monitoring - Fire management and prevention - Coordination with communities and other entities in the FMU
District Governments - Prepare, implement, and enforce regional regulations (and enforcement of national regulations, where appropriate), improve land management reduce deforestation related to oil palm plantation expansion, reduce encroachment with sustainable alternatives program plans and support activities for emission reduction.
- Implementation of ER interventions related to capacity building for fire prevention and control, facilitation of sustainable agriculture and estate crops, climate/green villages.
Village Governments - Develop ER activity plans with communities and land rights holder groups
- Develop benefit sharing plans and agreements for community and land rights holder groups
PRIVATE SECTOR
Estate crop concessions - Implementation of HCV policies - Partnerships with local communities - Fire management and control
Timber plantation concessions
- Implementation of SFM and HCV policies - Partnerships with local communities - Fire management programs
Forest management concessions (natural forest)
- Implementation of SFM, HCV, and RIL policies - Partnerships with local communities - Fire management programs
LOCAL COMMUNITIES INCLUDING ADAT COMMUNITIES
Benefit Sharing Plan_draft0.2
8
Beneficiaries Key ER Roles
Community groups - Reduction of land clearing - Adoption of alternative livelihoods - Adoption of fire management and control practices - Continuation of sustainable management practices
2.2 Eligibility Criteria Fund distribution from the BLU-BPDLH will require that the beneficiaries have a significant role in
Emissions Reduction (ER) Program implementation. Private companies and government institutions
must have legal status in order to receive benefits. The legal status is conferred to government agencies
through laws and decrees, while companies qualify through possessing valid land use licenses. Local
communities, including adat communities, need to be recognized by the village government but not
necessarily to have a formal land titles issued by BPN or to have their adat claims recognized by the
district. As the procedure for formal land titles is a lengthy process, and one of the activities under this
ER program is securing land tenure for adat communities (see Section 4.4. for details).
Table 2.2. The list of beneficiaries and eligibility criteria.
Beneficiaries Eligibility Criteria
GOVERNMENT INSTITUTIONS
National Level
National Government - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status in program implementation - Will not violate any regulation in receiving, using, and/or
channeling the benefit from the program
Conservation Agencies (National Parks, Nature Reserves)
- Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status in program implementation - Will not violate any regulation in receiving, using, and/or
channeling the benefit from the program
Sub-national Level
East Kalimantan Government - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status in program implementation - Will not violate any regulation in receiving, using, and/or
channeling the benefit from the program
FMUs - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status in program implementation - Will not violate any regulation in receiving, using, and/or
channeling the benefit from the program
District Governments - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status in program implementation - Will not violate any regulation in receiving, using, and/or
channeling the benefit from the program
Benefit Sharing Plan_draft0.2
9
Beneficiaries Eligibility Criteria
Village Governments - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status in program implementation - Will not violate any regulation in receiving, using, and/or
channeling the benefit from the program
PRIVATE SECTOR
Estate crop concessions - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status from the government through laws and decrees
- Have a valid land use licenses from the government
Timber plantation concessions
- Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status from the government through laws and decrees
- Have a valid land use licenses from the government
Forest management concessions (natural forest)
- Significant role in ER program implementation, validated against the role and responsibilities arrangements
- Have a legal status from the government through laws and decrees
- Have a valid land use licenses from the government
LOCAL COMMUNITIES INCLUDING ADAT COMMUNITIES
Community groups - Significant role in ER program implementation, validated against the role and responsibilities arrangements
- May have a legal status from the government through laws and decrees. In the absent of legal status, the community groups need to be recognized by the village government but not necessarily to have a formal land title issued by BPN or to have their adat claims recognized by the district (See Section 4.4. for details)
- Community groups who demonstrate legal basis and financial capability may receive the benefit directly through the group’s institution (details will be included in the POM)
- In the absent of community groups or whenever the community groups do not have legal basis and financial capability, the benefit will be channeled through the village government
2.3 Condition for Payment The conditions for payment to all beneficiaries are based on the performance in reducing emission
within their areas, and the participation of beneficiaries in ER activities. The performance will be
assessed using the monitoring procedures described in Section 9 ERPD, which requires the use of
independent verifiers and national registration system. The ER program reports from the Sub-national
Government are set to complete on December 2021 for period 2020-2021 and on December 2023 for
period 2022-2023, followed by a verification process by the MoEF MRV team in 2022 and 2024, for a
complete verified ER program reports in December 2022 and December 2024. It is expected the first
Benefit Sharing Plan_draft0.2
10
payment will occur in 2023 for performance in 2020-2021 and the second payment will occur in 2025 for
performance in 2022-2023.
The payment will be managed at national level by the Environmental Fund Management Agency (BLU-
BPDLH) to avoid possible bureaucratic delays. BLU-BPDLH will release payment to the national and
subnational government based on the ER Contracts. Two ER contracts will be made, the first will be
between BLU-BPDLH with the national government which cover the MoEF and conservation agencies in
East Kalimantan, and the second will be between BLU-BPDLH with the sub-national government which
cover the East Kalimantan Government, FMU, District Government, Village Government, Private Sector,
and Local Community. The contracts will describe that payment will be ordered by the MoEF to the BLU-
BPDLH according to the verified Emission Reduction at the sub-national level, which will be reported by
the East Kalimantan Provincial Government. The ER program report will include, but not limited to, the
number of reduced emissions based on the monitoring procedures in Section 9 ERPD, and the budget
spend related to the ER program. No payment will be made to the national government if the sub-
national government do not perform in the ER Program, as the national government is part of the ER
Program beneficiaries. It is expected that all budget related to the ER Program will be earmarked on the
program level in the sub-national government, but not on the activities level to avoid unnecessary
burden in project reports. The budget monitoring and evaluation will follow the legal procedures set by
the laws and regulations. In summary, the requirement process and documents needed to transfer
funds from BLU-BPDLH to the National & Sub-national Governments are shown in table 2.3 below. The
flow of fund disbursement (monetary and non-monetary) from ERPA Payment can be seen figure below.
Table 2.3. The requirement process and documents needed to transfer funds to beneficiaries.
Beneficiaries Type of Benefit
Benefit From
Requirement Supporting Documents
Benefit Sharing Plan_draft0.2
11
Beneficiaries Type of Benefit
Benefit From
Requirement Supporting Documents
National Government
MoEF Monetary BLU-BPDLH Verification by the MoEF MRV Team
Subnational ER Report & Expenditure Budget
Conservation Agencies
Monetary MoEF Approval from the Minister of MoEF
Conservation Agencies Activity Report & Expenditure Budget
Sub-national Government
Provincial Government
Monetary BLU-BPDLH Verification by the MoEF MRV Team
Subnational ER Report & Expenditure Budget
FMU Monetary Provincial Government
Approval from Governor
FMU Activity Report & Expenditure Budget
District Government
Monetary Provincial Government
Approval from Governor
District Activity Report & Expenditure Budget
Village Government
Monetary Provincial Government
Approval from Governor
Village Activity Report & Expenditure Budget
Private Sector Non-monetary
Sub-national Government
Approval from Governor
OPD's Activity Report & Expenditure Budget
Community Monetary Provincial Government
Approval from Governor
Community Activity Report & Expenditure Budget
Non-monetary
Sub-national Government
Approval from Governor
OPD's Activity Report & Expenditure Budget
Sub-national Governments
For the provincial and district governments, these funds will be recorded as ‘Earmarked Miscellaneous
Revenue’. The access to this Earmarked Miscellaneous Revenue will have to follow regular budgeting
processes. The OPD (Sub-national Technical-unit Organization, Organisasi Perangkat Daerah) will have
to present budget proposals (beginning in January of every year) to the Provincial Planning Agency
(BAPPEDA) for allocation in the budget prior to parliamentary (DPRD) budget review. The draft budget
(RAPBD) will have to be approved in December of every year for disbursement the following year. The
process may take from three months to one year, depending on the timing of the received payment.
In order to receive the ER payments, the East Kalimantan Provincial Government will develop and
submit reports every two years, describing the performance in implementing the ER Program activities
planned in the ERPD. The first report will be in 2022 while the second will be in 2024. The report will be
submitted by the Provincial Government to the MoEF for further verification. On the number of
emissions reduced, the amount of ER will be verified by the MoEF and independent teams as part of the
registration mechanism in the national registration system (SRN). Both technical and financial aspects on
the ER Program implementation will be included in the report.
Private Sector & Communities
Benefits for private sector companies will be provided through the Forestry or Estate Crop Service. BLU-
BPDLH will transfer funding directly to the sub-national government for this purpose as no monetary
Benefit Sharing Plan_draft0.2
12
benefit will be transferred to the private sector. Private sector must hold valid land use licenses to
receive the benefit from this program.
Communities can directly receive funds from BLU-BPDLH whenever the local institutional capacities
(such as Masyarakat Adat or Social Forestry Institution) is in place, or through village government if no
local-institutional capacity in place. The fund allocation for private sector will be administered by the
supervising sub-national government agency. This is because private sector will receive non-monetary
benefit3 from this ER Program.
In order to receive the benefit, the private sector and communities will need to submit Concept Notes4
that report on performance and include proposals for the use of benefits. The condition for payment for
communities will follow the process as below:
Village governments, on behalf communities, must be recorded in both the Sub-National Registry Systems.
Village governments, on behalf of communities, submit Report to Community Empowerment Services (DPMPD). This submission will be at the district level.
The DPMPD report to the Governor through the Provincial Environment Service (DLH), which coordinates the data for the ER Program and validates the report (in coordination with the national government and the Provincial Climate Change Council (DDPI), which includes representatives of relevant local government organizations, professional staff, and ad hoc technical specialists) and determines the level of funding for each report.
The Governor send the report to MoEF and request payment from BLU-BPDLH.
Communities will receive benefits directly from BLU-BPDLH through a custodian bank.
ER Contracts will be signed between the BLU-BPDLH and the communities, with the DPMPD as witness, specifying the plan for use of benefits.
DLH monitors the use of these benefits and reports on this to the Governor.
3 BENEFITS
3.1 Description of Benefits The benefits from the emissions reduction (ER) Program come from ER payments and categorized as
monetary and non-monetary benefits. The ER Payments are the entire volume of ER paid to Indonesia in
a given reporting period. The first reporting period will be in 2022 followed by the first ER Purchase
Agreement (ERPA) in 2023, and the second reporting period will be in 2024 followed by the second ERPA
in 2025. The monetary and non-monetary benefits are any monetary or non-monetary goods, services
or other benefits related to payments received by beneficiaries. The benefits could be directly related or
provide a direct incentive to the implementation and operation of the ER Program, which can be
monitored in an objective manner (FCPF Carbon Fund Methodological Framework, 2016).
3 There was an opinion on the Stakeholder Consultation (May 2019) to include monetary benefit for private sector. 4 There was an opinion to change the concept note term into report. The KLHK suggest concept note as it is
regulated in the BLU regulation, while the DDPI suggest report as it is result based, thus no concept note is needed, only report.
Benefit Sharing Plan_draft0.2
13
The value of benefits from the ER Program will be from the sale of verified ERs to the Carbon Fund,
which is anticipated to be up to USD 110 million with 22 MtCO2e for a price of USD5/tCO2e5. This is a
conservative estimation compare to the 61.3 MtCO2e available net Emissions Reduction (ER) estimated
during the ERPA period6. Funding for the Program’s ER activities will be covered by the GoI’s budget,
private sector, and by development partners leaving the entire value of the ER payments for distribution
as monetary and non-monetary benefits. Thus, monetary benefits are defined as cash, funded with ER
payments, that is received by beneficiaries; and non-monetary benefits are goods, services, or other
benefits funded with ER payments.
It is expected that the ER Program will generate significant levels of benefits that will be directly
received by the beneficiaries. Not only the monetary benefit, but also non-monetary benefit from
participating in ER activities, such as increased capacity, and improved livelihoods; and benefits derived
from improvements in governance, such as greater legal certainty, and reduced costs associated with
conflict.
All beneficiaries will be eligible to receive monetary benefits. Specifically in East Kalimantan, the private
sector expressed their preference through stakeholder consultations to the sub-national government, to
only receive non-monetary benefits as part of the BSP7. The private sector interest more on the ease of
business, and the enabling condition to maintain business in the areas. The use of monetary benefits will
be determined through ER contracts8. The National and Sub-national Governments will channel the ER
payments to the beneficiaries.
3.2 Specific Benefits by Beneficiary Group The monetary and non-monetary benefits for all beneficiaries will be implemented under the ER
Program and are align with the mid-term development plan to demonstrate the coherence between
sub-national development program and the emission reductions activities of the ER Program. The types
of benefits for each category of beneficiaries are outlined in Table 3.1 below.
Table 3.1. The types of benefits for each category of beneficiaries.
Beneficiaries Types of benefits Rationale
Government institutions
National Government
Monetary benefits for covering operational costs, defined as expenditures related to the technical support (e.g., MRV, safeguards) and administrative and financial management of the ER Program
The monetary benefit is given to compensate the roles and responsibilities taken under the ER Program implementation.
5 The price is still subject for discussion during the ERPA negotiation. 6 ERPD Section 13, Table 13.9. Total expected net emission reduction (tCO2e). 7 The minutes of meetings (MoM) of the stakeholder consultations will be provided by the Provincial Government
8 Still under discussion where the national government requires the fund-spending be determined, in contrast with the sub-national government.
Benefit Sharing Plan_draft0.2
14
Beneficiaries Types of benefits Rationale
Non-monetary benefits in capacity building in financial management system for ER program, strengthening institution for ER project management and coordination across sectors
The non-monetary benefit is given as a support for activities to ensure the implementation of the ER Program at the national level.
Conservation Agencies
Monetary benefits for covering operational costs9
The monetary benefit is given to compensate the operational cost under the ER Program implementation.
Non-monetary benefits for support on conflict identification and resolution, joint protection and fire prevention control in conservation areas
The non-monetary benefit is given as a support for activities to improve the conservation agencies support in sub-national level.
East Kalimantan Government
Monetary benefits for covering operational costs
The monetary benefit is given to compensate the roles and responsibilities taken under the ER Program implementation.
Non-monetary benefits for support on capacity development on monitoring ER, improving data through groundtruthing, developing HCV monitoring system, training on SESA and ESMF
The non-monetary benefit is given as a support for activities to improve the ER Program management and implementation at the sub-national level.
District Governments
Monetary benefits for covering operational costs
The monetary benefit is given to compensate the operational cost under the ER Program implementation which was different with the allocation to the community (for performance). In some cases, the monetary benefit for the community might channeled through the village government.
Non-monetary benefits for support on enhancing sustainable mangrove practices, sustainable peat land agriculture, training on RIL and HCV management
The non-monetary benefit is given as a support for activities to ensure the implementation of the ER Program at the district level.
Village Governments
Monetary benefits for covering operational costs
The monetary benefit is given to compensate the operational cost under the ER Program implementation.
Non-monetary benefits for capacity development training in managing funding for community, supervising the ER program implementation on village level
The non-monetary benefit is given as a support for activities to improve the capabilities in managing and implementing the ER program on the ground in village level.
9 Despite the conservation agencies are in sub-national level, the operational cost will be separated with the sub-national and categorized as national government.
Benefit Sharing Plan_draft0.2
15
Beneficiaries Types of benefits Rationale
FMUs Monetary benefits for covering operational costs
The monetary benefit is given to compensate the operational cost under the ER Program implementation.
Non-monetary benefits for capacity building, including for facilitation with communities (e.g., awareness, conflict resolution, etc.); capacity building/training and equipment for SFM, RIL, HCV, forest and fire management, social forestry, and livelihoods opportunities for communities
The non-monetary benefit is given as a support for activities to improve the FMUs capabilities in managing and implementing the ER program regarding the collaboration with stakeholders on forest-land status.
Private Companies
Estate crop concessions; Timber plantation concessions; Forest management concessions
Non-monetary benefits in the form of capacity building/training on sustainable plantations, HCV protection, certifications (e.g., FSC/PHPL, RSPO/ISPO), sustainable forest management (e.g., RIL-C), fire management, and tenure conflicts/public complaints; Non-monetary benefits for equipment and inputs (e.g., planting stock) to support sustainable practices
The non-monetary benefit is given to improve the private companies capabilities in managing their land regarding to the achievement of the ER Program objectives.
Local Communities Including Adat Communities
Community groups
Monetary benefits10 will not be in the form of cash for the community, instead in a long-term investment to provide long-term impact under the poverty alleviation and environmental sustainability framework such as seeds for farm, agroforestry, livestock, and similar investment which will incentives the village than individual community.
The monetary benefit is given to reward the community achievement in reducing emissions and to implement long-term strategy in protecting forest and improving community livelihood, as community is the key actor in environmental protection.
10 Still under community consultations
Benefit Sharing Plan_draft0.2
16
Beneficiaries Types of benefits Rationale
Non-monetary benefits for forest and fire management, including patrolling, equipment, and capacity building/training; Development projects (e.g., health, education, public facilities) that do not contribute to deforestation and forest degradation; Additional livelihood support for community businesses, including capacity building/training, equipment, market access, or agricultural inputs
The non-monetary benefit is given as a support for activities to improve the community capabilities not only in implementing the ER Program, but also in improving livelihood to avoid any potential reversal risk of deforestation and forest degradation.
4 BENEFIT DISTRIBUTION
4.1 Proportion and Criteria of Benefits The benefits from the emissions reduction (ER) Program come from ER payments. The ER Payments are
the entire volume of ER paid to Indonesia in a given reporting period. The first reporting period will be in
2022 followed by the first payment in 2023, and the second reporting period will be in 2024 followed by
the second payment in 2025. It is expected that the ER Program will generate USD 110 million in
performance-based payments through the sale of Emission Reductions to the Carbon Fund.
The total program cost over the period 2020-2025 is estimated at USD 90,701,740 with annual costs
over years are USD 7,872,514 (in 2020), USD 5,434,036 (in 2021), USD 16,475,394 (in 2022), USD
9,375,949 (in 2023), USD 23,825,171 (in 2024), and USD 27,718,675 (in 2025). The main source of
funding will come from the government budget of USD 69,518,306, where the second largest source is
the private sector which has committed a total of USD 3,528,590 to the program. The ER payments from
the FCPF was not in the financing strategy and will be categorized as a reward for Indonesia in achieving
emission reductions. Nevertheless, the ER Payment might further be used to escalate more ER Program
implementation on the ground to deliver greater emission reductions. Thus, proportioning the potential
benefit generated from the ER Program is needed.
The implementation of the ER Program involves a wide range of considerations, from the strategy to
implement ER activities, the needs to strengthen actor’s capabilities in implementing ER activities, the
necessity to secure policies and regulations in ER program, the needs to improve community livelihood
and increase sub-national economic growth, up to the potential gain (or loss) of investment and
opportunity cost by implementing the ER Program. Thus, for the ER Program and the benefits sharing
system to be viable, all those considerations should be properly covered throughout the implementation
of the ER Program. Hence, three main allocation were agreed11 in this benefit sharing mechanism,
namely Responsibility Allocation to incentives governments in governing the ER Program, Performance
11 Discussed in October 2018, agreed in Mission in December 2018. The responsibility allocation comes up in April 2019 Stakeholder Consultation (SC) which then agreed to replace the operational cost (in ERPD) in May 2019 SC.
Benefit Sharing Plan_draft0.2
17
Allocation to incentives beneficiaries in reducing emissions, and Reward Allocation to incentives
communities who have demonstrated continued protection of forest.
Figure 1. The benefit sharing distributions.
4.1.1 Responsibility Responsibility allocation was made to provides an incentive for government institutions to continue
supporting ER policies that contribute to program sustainability and reduce the risk of reversals. This
portion of funding will be allocated to government institutions based on their roles in policy
development, program development, program management, and monitoring. In ERPD, most of those
roles are reflected on “Component 1: Forest and Land Governance”, “Component 2: Government
Capacity for Forest Administration”, and “Component 5: Program Management and Monitoring and
Evaluation” which sum up to 19% budget allocation.
In addition, high costs of accessing sites in the ER Program Area (some areas can take two days to reach
from the province capital involving land & water transportation), the size of the jurisdiction (related to
the hectares of forest to be monitored and the monitoring of program implementation), the large
number of stakeholders in the ER Program (related to the program management and engagement
process), the costs of facilitating between different levels of government (i.e. national and sub-national),
the costs supporting communities in preparing Concept Notes12 (higher cost on communities with
limited understanding of the project concept notes and/or communities that hard to reach a consensus),
and the opportunity cost of maintaining policies that support ER activities (related to the policy
development role). Thus, as much as 25% from the total gross ERPA Payments is budgeted in this
12 There was a suggestion on Stakeholder Consultation (May 2019) to change the name into repot as it is to report what have been achieved, instead of proposing what will be achieved.
Gross ERPA Payments
Responsibility (25%)
National Government
Sub-national Government
Performance (65%)
Communities
Village Government
FMU
Private Sector
Conservation Area
Reward for historical forest protection (10%)
Benefit Sharing Plan_draft0.2
18
allocation to compensate the government institutions for their roles in policy development, program
development, program management, and monitoring. Other than the monetary benefit, the
governments will also receive non-monetary benefit (in the form of training, equipment, etc.) as part of
the ER Program implementation beyond this Responsibility Allocation.
The 25% allocation under Responsibility Allocation will be distributed into National Government and the
Sub-national Government. The proportion of each government will be based on criteria namely: the
operationalization costs in implementing the program management and monitoring systems, the
initiatives in policy developments in to support the ER program, and the roles and responsibility of each
government to be accountable in supporting the ER program. Those criteria are somewhat reflected on
the financing strategy in the ERPD Section 6.2.2, where the National Government was allocated 55% and
the Sub-national Government was allocated 45% of the total Government source of funding13. It is also
expected that the programs under the National Government (i.e. MoEF and the Ministry of Agriculture)
will be funded by the respective ministry budgets. Thus, converting to the 25% Responsibility Allocation,
the National Government has 14% proportion of the allocation and the Sub-national Government has
11% proportion of the allocation14.
4.1.2 Performance Performance allocation was made to incentives beneficiaries’ performance in reducing emissions. This
portion of funding will provide monetary benefit to all beneficiaries except the government (National,
Provincial, District, and Village), and will be used to provide non-monetary benefit to all beneficiaries
including the government as the government will have received their monetary benefit through the
Responsibility Allocation.
In ERPD, emissions will be reduced by implementing ER activities. These activities are mostly reflected
on “Component 3: Reducing Deforestation and Degradation within Licensed Areas” and “Component 4:
Sustainable Alternatives for Communities” that sum up to 81% of the budget cost which was the largest
cost in implementing the ER Program. Corresponding to the cost, the allocation from ER Payment to
incentives performance in reducing emissions should also be the largest. Thus, around 65% of the gross
ERPA Payments is budgeted for Performance Allocation. The justification for the 65% proportion is due
to the amount of financial need in performing activities to reduce emissions (see section 6 ERPD). This
allocation will be purely performance-based. The performance of beneficiaries will be measured against
historical emission baselines using appropriate proxy15 approaches, where full accounting of emissions is
not feasible.
The 65% allocation under Performance Allocation will be distributed into five beneficiaries that
contribute to the emission reductions, namely community groups (including adat communities) which
have capable community institutions, village governments for communities which have no capable
community institutions, FMUs, Conservation Units (in addition to the Responsibility Allocation), and the
13 Village budget was excluded because it was formed by both National Government Budget Allocation (APBN) and Sub-national Government Budget Allocation (APBD). 14
Under consultation, no agreement was made yet. 15 Forest cover will be used as a proxy for emissions from deforestation, and logging data will be used as a proxy for emissions from degradation in logging concessions (Section 9 ERPD).
Benefit Sharing Plan_draft0.2
19
private sectors. It is expected that communities will receive higher share of benefits than the private
sector given their respective roles in managing forests and ER Program implementation. Private
companies are obligate to implement good practices; therefore, they will be rewarded only if they
perform beyond compliance and do more than their business-as-usual. Nevertheless, private companies
in East Kalimantan expressed their preference through stakeholder consultations to the sub-national
government, to only receive non-monetary benefits as part of the BSP. Thus, the monetary benefit from
Performance Allocation will be managed by the supervising Sub-national Technical-unit Organization
(OPD, Organisasi Perangkat Daerah)16. The proportion of each beneficiaries will be mainly based on
performance in emission reductions within their management areas. Thus, unit management with areas
that reduce emissions the most by implementing activities in the ERPD, will also reward the most
without neglecting the equitable principle in benefit sharing.
Based on the criteria, the appropriate proportions for beneficiaries under Performance Allocation will
follow the ex-ante calculation in the ERPD (Table 4.4) which was design to address the drivers of
deforestation. Despite the private-estate crops received the highest proportion, the use of funding will
be targeted more to the community that lives around the private-estate crops for improving smallholder
management, training on fire prevention, providing equipment, and assisting community and
smallholder to comply with the HCV and sustainable palm oil standards. The Sub-national Government’s
OPD will manage the fund allocation and implementation of monetary benefit for the private sector. For
the conservation agencies, the monetary benefit will be distributed directly through the National
Government and managed by the conservation agencies. For the FMU, the benefit will be transferred
through the Provincial Government, and managed by the FMU. For communities who have sufficient
institution capability (for receiving, managing, and reporting), the funding can go directly to and
managed by the community groups. For communities who possess no institutional capability, the
funding can be channeled through the village government institution. This Performance Allocation
through the village government is different with the Responsibility Allocation for the Village
Government.
Table 4.1. The proportion based on ex-ante calculation in ERPD.
Beneficiaries Percentage FCPF Proportion (65%)
Conservation Agencies 0.20% 0.13%
Private Companies (Private-estate crops) 41.11% 26.72%
FMU 40.96% 26.62%
Communities Group 2.75% 1.79%
Village government (communities) 14.98% 9.74%
Total 100% 65%
4.1.3 Reward Reward allocation was made to reward communities who have had net-zero or low deforestation rates
in the past17 and who can demonstrate continued protection of forest. This portion of funding will be
allocated for communities, to recognize their past-good practices and to ensure they are continuing
such good practices. This could also encourage other communities to adopt good practices. This funding
16 Stakeholder Discussion in April 2019. 17 Land cover maps are available since 2006, which will be the basis of this measurement.
Benefit Sharing Plan_draft0.2
20
will apply only to communities, including adat communities, whose forests have remained protected.
The rewarded communities will be based on the land cover maps since 2006, and the selection will
follow the principles of equitable, transparent, effective, respect customary rights to lands and
territories and reflect broad community support, and have clear legal status on rights to carbon and
relevant lands.
4.2 Processes and Timelines for the Benefit Distribution
4.2.1 Process for the distribution of benefits Funding from the Carbon Fund will be managed by the Environmental Fund Management Agency
(Badan Layanan Umum - Badan Pengelola Dana Lingkungan Hidup/BLU-BPDLH). The BLU-BPDLH is still
under development but is expected to be operational at least by the time of the first ERPA payment. It
will adopt international standards for fund management and distribution, and it will use a custodian
bank as trustee.
ERPA funding will be managed at national level by the Environmental Fund Management Agency (BLU-
BPDLH) to avoid possible bureaucratic delays. BLU-BPDLH will release payment to the sub-national level
based on the ER Contract which describes that the payment will be ordered by the MoEF according to
the number of reduced emissions in the sub-national level. Transfer to beneficiaries will be based on the
performance of roles and responsibilities of each party related to the emission reduction program.
At the national level, BLU-BPLDH will transfer funds to MoEF’s Directorate Generals that are involved in
the ER Program, including the DG of Climate Change, and the Research Development and Innovation
Agency (FORDIA). The transfer mechanism to central government institutions will be through non-tax
revenue (PNBP) and its utilization will be included in MoEF’s budget (DIPA) in accordance with activities
in the Benefit Sharing Plan. Transfers will be regulated through Ministry of Finance Regulations (PMK).
As noted above, the scale of funding that will be allocated to the central government institutions will be
a fixed percentage of the total funding available under the Responsibility Allocation. This percentage will
be determined prior to the signing of the ERPA and is expected to be around 5-10% of total ERPA
payments.
At the subnational level, BLU-BPDLH will transfer the funds to Provincial treasury. Transfer can also be
made directly to the communities whenever the local institutional capacities (such as Masyarakat Adat
or Social Forestry Institution) is in place or through village government if no local-institutional capacity in
place. The provincial treasury then distributes the funds to other beneficiaries (FMU, OPD, and village
government) according to the performance of each beneficiaries the roles and responsibilities of each
beneficiaries in ER program. For the private-estate crops, the fund allocation for private sector will be
administered by the supervising sub-national government agency. This is because private sector will
receive non-monetary benefit18 from this ER Program.
The fund flow will be based on contracts (that details the roles and responsibility of each party in ER
Program) between BLU-BPDLH and the East Kalimantan Provincial Government. The funds will flow
directly from BLU-BPDLH to the recipient’s bank account. The recipients will utilize the funds in
18 There was an opinion on the Stakeholder Consultation (May 2019) to include monetary benefit for private sector.
Benefit Sharing Plan_draft0.2
21
accordance with the activities planned in the ERPD. The province and district governments will detail the
intended use of their funds in their budget documents (DPA). The scale of funding that will be allocated
to the subnational level is the fix percentage from the Responsibility Allocation, Performance Allocation,
and the Reward Allocation with expected percentage of 25%, 65%, and 10% respectively.
Figure 2. The schematic design for benefit sharing distribution
The procedures in Figure 3 is described as follow:
1. The Subnational Government register the ER Program in SRN. By 2022, the Subnational Government report the activities implementation (monitoring) to the National Government (MoEF).
2. Verification teams both at sub-national (independent party) and national level (MoEF MRV) verify the submitted report.
3. The MoEF MRV submit the approval on the submitted report and on the amount of emission reduced to the Subnational Government through the Governor.
4. The Subnational Government request for RBP to the BLU-BPDLH with supporting documents of Sub-national ER report and expenditure budget.
5. BLU-BPDLH request MoEF to assess the Sub-national ER report and expenditure budget. 6. The MoEF provides approval to the MoEF. 7. BLU-BPDLH order the custodian bank to transfer the RBP to both National Government and the
Sub-national Government. 8. The custodian bank transfers the RBP to the Sub-national Government through Regional
Treasury. 9. The funding earmarked as REDD+ funding. 10. On Governor order the Regional Treasury to distribute the incentive to all beneficiaries following
the Benefit Sharing Plan and based on DDPI/Environmental Agency recommendation.
Benefit distribution process for communities and private sector companies
Benefits for private sector companies will be provided through the Forestry or Estate Crop Service. BLU-
BPDLH will transfer funding directly to the sub-national government for this purpose as no monetary
Benefit Sharing Plan_draft0.2
22
benefit will be transferred to the private sector. Private sector must hold valid land use licenses to
receive the benefit from this program.
Communities can directly receive funds from BLU-BPDLH whenever the local institutional capacities
(such as Masyarakat Adat or Social Forestry Institution) is in place, or through village government if no
local-institutional capacity in place. The fund allocation for private sector will be administered by the
supervising sub-national government agency. This is because private sector will receive non-monetary
benefit19 from this ER Program.
In order to receive the benefit, the private sector and communities will need to submit Concept Notes20
that report on performance and include proposals for the use of benefits. The condition for payment for
communities will follow the process as below:
Village governments, on behalf communities, must be recorded in both the Sub-National Registry Systems.
Village governments, on behalf of communities, submit Report to Community Empowerment Services (DPMPD). This submission will be at the district level.
The DPMPD report to the Governor through the Provincial Environment Service (DLH), which coordinates the data for the ER Program and validates the report (in coordination with the national government and the Provincial Climate Change Council (DDPI), which includes representatives of relevant local government organizations, professional staff, and ad hoc technical specialists and determines the level of funding for each report.
The Governor send the report to MoEF and request payment from BLU-BPDLH.
Communities will receive benefits directly from BLU-BPDLH through a custodian bank.
ER Contracts will be signed between the BLU-BPDLH and the communities, with the DPMPD as witness, specifying the plan for use of benefits.
DLH monitors the use of these benefits and reports on this to the Governor.
Intermediaries will be used to support communities that lack technical capacity to develop Concept
Notes. Intermediaries could include NGOs, government institutions and universities. These
intermediaries will be funded by the provincial government under their operational costs.
4.2.2 Timelines for the distribution of benefits The ER Program will have two reporting periods (2022 and 2024), each followed by an ER payment from
the Carbon Fund roughly one-year after (2023 and 2025).
The flow of funds (and process for the government for receiving benefits) begins with the ER payment
being received by the BLU-BPDLH and transferred to the sub-national governments. These funds will be
recorded as ‘Earmarked Miscellaneous Revenue’ – this will ensure that revenue will be reallocated as
benefits as specified in the Benefit Sharing Plan. The access to this Earmarked Miscellaneous Revenue
19 There was an opinion on the Stakeholder Consultation (May 2019) to include monetary benefit for private sector. 20
There was an opinion to change the concept note term into report. The KLHK suggest concept note as it is regulated in the BLU regulation, while the DDPI suggest report as it is result based, thus no concept note is needed, only report.
Benefit Sharing Plan_draft0.2
23
will have to follow regular budgeting processes. The OPD will have to present budget proposals
(beginning in January of every year) to the Provincial Planning Agency (BAPPEDA) for allocation in the
budget prior to parliamentary (DPRD) budget review. The draft budget (RAPBD) will have to be approved
in December of every year for disbursement the following year. The process may take from three
months to one year, depending on the timing of the received payment.
The fund will be utilized in accordance to the ERPD document (Table 15.2 version May 2019) with
activities that contribute to the reduction of emissions. The activities will then be adjusted following the
priority and policy direction for sub-national development plan, which will be described in Governor
Regulation. The evaluation of the activity’s implementation will follow the multi-stage monitoring
mechanism as directed in regulations and legislations.
To summarize the timeline, the Government of Indonesia will report on ERs to the World Bank and it
may take up to one year to verify these ERs and make payment. Following this, it may take three months
to one year, depending on budget cycles, for benefits to be distributed to beneficiaries.
5 MONITORING
5.1 Implementation of BSP The ER payments will be based on results (ex-post), according to the resulted emissions reduction (ER)
due to the implementation of the ER Program. The Government of Indonesia will report on the
implementation of the Benefit Sharing Plan in the ER monitoring reports. All transfers will be verified by
the Ministry of Environment and Forestry to ensure that the payments are based on performance and
comply with the principles and criteria of REDD+ and the Carbon Fund. Monetary benefits received by
the governments and implementers will be monitored by the DG for Climate Change of the MoEF and by
the Environment Agency. The fund spending by the beneficiaries will be regulated through the ER
Contracts, or through the budgetary process for government institutions, and will be reported on in the
ER monitoring report. Any grievances regarding the carbon fund payment transfer and its mechanism
will be addressed through the FGRM (see Section 14.3 ERPD).
The implementation and monitoring of performance of the ER Program will follow the Ministry of
Environment and Forestry regulation No.70/2017 which includes guidance on MRV for REDD+. For
example, the regulation states that measurement should take place at least twice a year (Article 10),
that an independent verifier shall be used (Article 12), and that the system shall include a registry
(Article 13). The ER Program’s MRV design will comply to the regulation and involve an independent
verifier in addition to the verification by the Ministry of Environment and Forestry (see details on
Chapter 9 ERPD).
5.2 Safeguards The use of benefits under the BSP (both monetary and non-monetary) will be subject to safeguards
requirements as stipulated in the ERP’s ESMF, IPPF, RPF, PF and FGRM. This was discussed further on the
safeguards chapter in the ERPD. Consistent with the benefit distribution process under the BSM,
respective agencies who are responsible for oversight (DPMPD, Forestry and Estate Crop Services as well
Benefit Sharing Plan_draft0.2
24
as Provincial Forestry Service) will report to the Governor through the Provincial Environmental Service
(DLH) for the overall implementation of safeguards under the BSP. Such reporting will complement the
ERP’s FGRM, which is being developed to address future BSP implementation. Program-level oversight
for this oversight and grievance management will be under coordination from a Program Management
Unit (PMU) at the national level and provincial government.
ER Program entities and benefit recipients are required to monitor and report safeguards compliance
over the duration of the ER Program unless agreed otherwise or there is a dedicated resource allocation
for such monitoring and reporting to continue following the Program’s closure.
6 CONSULTATION & COMMUNICATION
6.1 Summary of consultations and incorporation in BSP An initial workshop was held in December 2015 in Jakarta to discuss the channeling of funding from the
Ministry of Finance to the province. This workshop included representatives from MoEF, MOF, the East
Kalimantan Government, development partners and national NGOs. The meeting helped to identify the
on-granting mechanism as a potential component of the benefit-sharing arrangements. A study on the
Benefit Sharing Mechanism in East Kalimantan was conducted in 2016.
Benefit sharing arrangements were discussed further between the Ministry of Environment and Forestry
and the Provincial Treasury Agency. In November 2017, the Provincial Treasury Agency (BKAD) and
provincial development planning agency (BAPPEDA) discussed the appropriate benefit sharing
arrangement for East Kalimantan. It was suggested that the FCPF might use the on-budget off-treasury
mechanism for benefit-sharing arrangements so that it will avoid bureaucratic procedures from the
central to province and/or district governments. However, Presidential Decree No. 77/2018 for the
establishment of BLU-BPDLH, stipulated an on-budget on-treasury system, but with a number of
provisions to reduce the bureaucracy associated with this process.
As mandated in Act No 32/2009 on Environmental Protection and Management, the Government should
provide a policy for an environmental economic instrument. Referring to this mandate, the Government
issued Government Regulation No. 46/2017 which regulates development planning and economic
activities, environmental funding, and incentives/disincentives. As an umbrella regulation, PP 46/2017
regulates that the government applies the public service agency (BLU) approach to managing the
environmental fund. The development of Government Regulation no 46/2017 involved discussions with
stakeholders, including other line ministries, local governments, NGOs, the private sector, and
academia. Further, a public consultation process was held in selected areas to gain input from local
government and other local stakeholders.
A consultation between the national and provincial government was held in October 2018 and the
discussion included:
A proposal that the Provincial Government would have exclusive authority to manage and disburse the Carbon Fund from the provincial level to the field level (village level).
A discussion of the allocation of benefits between central and provincial governments with a proposal that the majority of the funds will be disbursed to the province.
Benefit Sharing Plan_draft0.2
25
The BLU-BPDLH was confirmed as the national agency for channeling benefits to the Provincial Government once ER performance reports have been verified by the MoEF.
A follow up consultation was held in April 25th, 2019 to discuss on the BSP outline, the beneficiary’s
criteria, and the parameters used to allocation each beneficiary proportions within the ER Payment
allocations. In this stakeholder consultation, the outline was agreed, the beneficiary’s criteria were re-
emphasized in order to design the beneficiary proportions. There was also a discussion to change the ER
Payment allocation’s name from the Operational Cost into the Responsibility allocation. The reason for
the change is to provide a clear description where the Responsibility allocation covers not only
operational cost but also incentives the good initiatives in policy developments in to support the ER
program. This coverage was not reflected when the allocation called Operational Cost.
The most recent consultation was held in May 9th-10th, 2019 discussing about the fiscal transfer
mechanism for the ER payments, and the detail proportion for each beneficiary in within the ER
Payment allocation. Stakeholder from the Ministry of Finance and the Ministry of Interior attended the
consultation. Thus, a clear mechanism on transfer from BLU-BPDLH to the Sub-national Government and
the Village Government are confirmed and agreed. The proportion for each beneficiary was also
consulted based on the parameters and criteria discussed in the earlier stakeholder consultation (April
25th, 2019) albeit no agreements were made. All possible options were provided in this BSP_draft0
document.
6.2 Consultation Plan Further benefit sharing arrangements will be designed through a consultative process involving the key
stakeholders in finalizing the BSP as spart of the FPIC process. As a part of FPIC process, ER program will
be introduced to relevant stakeholders at district level. The process will be continually extended to
village levels.
The roadmap for the completion of the Benefit Sharing Mechanism is envisioned as follows:
Milestone Deadline
GOI submits BSP draft 0.2 to WB and they exchange on BSP until advanced draft (see milestone 4)
July 5, 2019
FPIC process initiated and BSP draft 0.2 is consulted July 8, 2019
National consultation on BSP August 7, 2019
GOI submits draft BSP to WB for formal review August 15, 2019
WB holds Quality Enhancement Review ~August 22, 2019
WB holds Decision Meeting on ERPA ~Week of September 9, 2019
WB Appraisal of the Program ~Week of September 16, 2019
FPIC process concludes first week October 2019
GOI submits advanced (‘near-final’) draft BSP to WB for formal review October 15, 2019
Benefit Sharing Plan_draft0.2
26
WB shares BSP with CFPs for feedback on fundamental issues (2 weeks required)
October 2019
Formal ERPA negotiations November 2019
ERPA signature December 2019
6.3 Feedback and Grievance Redress Mechanism (FGRM) The FGRM is currently being developed to coordinate across existing mechanisms to address grievances
and disputes. Under the ERP, a Program Management Unit (PMU) at the national level and provincial
government, with extension units at the district level will be established to monitor and report
grievances and conflicts to relevant stakeholders in a coordinated and timely manner. The FGRM
institutional arrangements will be nested in the ERP institutional arrangements, which are currently
being finalized. Specific coordination mechanisms, including definition roles and responsibilities are
currently being developed and will be finalized as part of the development of ERP institutional
arrangements. Any grievances regarding the carbon fund payment transfer and its mechanism will be
addressed through the FGRM (see Section 14.3).